By Scott Moritz
Solar tech stocks got a small jolt Wednesday after the U.S. Senate included an extension of renewable energy tax credits in its $700 billion financial bailout package.
A vote by the Senate on the financial rescue plan is expected Wednesday. If passed it will head to the House of Representatives, which could vote as early as Thursday. In a surprise move, the Senate version of the proposed package salvages key renewable energy subsidies left in limbo by the House last week.
“It was thought that this thing was likely dead until a new president was sworn in,” says Collins Stewart analyst Dan Ries, referring to the investment tax credit, or ITC.
Senate leaders included in the bailout bill extensions of the renewable energy investment and production tax credits that expire at the end of the year. “The legislation also includes alternative minimum tax relief and an increase of the FDIC insurance cap to $250,000; measures that will help the bill gain support with House members,” Ries wrote in a research note.
Solar stocks have had a particularly rocky week as uncertainty over whether the tax credits would be extended has left hanging billions of dollars in solar and wind projects in the pipeline.
“Today’s ITC development is certainly an unexpected positive catalyst, Barclays analyst Vishal Shah wrote Wednesday.
The Senate bill extends for three years the production tax credit crucial to the wind industry as well as grants an eight-year extension of the 30% investment tax credit for solar projects.
Solar wafer maker LDK Solar rose 10% in midday trading Wednesday but is still down 36% in the past month. Similarly, solar cell manufacturer, JA Solar was up 11% but still 34% down in the past 30 days. Silicon Valley solar module make SunPower was up nearly 9% Wednesday.
While far from a done deal, Collins Stewart’s Ries is optimistic that the credit crisis has lawmakers in a conciliatory mood. “House and Senate have bounced different versions of solar bills back and forth over the past two weeks,” he says. “Given the urgency of the bailout plan, we believe there will be pressure to keep changes to this large package of legislation to a minimum.”
“There’s a ray of hope,” Ries added. “I’d give it a better than 50% chance of passing.”